Nvidia: Warning To Crypto-Nvidia Bears

We recently spoke with the company. Our take is that core gaming can offset all the crypto-NVIDIA bear fears. And lookie-lookie; Bitcoin just broke a downtrend. Crypto-NVIDIA bears: you’ve been warned.

Let’s get into it.

One Thing Matters This Quarter: The Gaming Line Item

In looking at our model the main story is what’s going to happen in their ‘Gaming’ line-item.

That’s 50% of their business and likely had crypto benefits in Q4. Based on history gaming has been down 15-20% in the April quarter. I think there’s a chance it can be down single digits. If so, sorry crypto-NVIDIA-bears. You’re going to have to run for cover. That’s their whole story. If the numbers are fine, then there’s no negative crypto story.

Sorry bears.

That all-important Gaming line-item, I think, can then grow in the July quarter and grow big in the back half.

New Gamer-GPU Offset

The back half could have a new gamer-GPU launch which not many people are expecting. If correct that would mean the crypto negative hype is just that, hype. The numbers can still be great. And for any company… that’s really all I care about, the numbers, the earnings. Earnings ultimately drive stock prices.

NVIDIA has a new gaming GPU launched every 2-2.5 years and Pascal was launched May 2016 so do the math. They are due for a new GPU and we could see something coming later this year which can more than offset crypto.

Crypto Bottom?

Let’s not forget also, if crypto prices bottom and it looks like it broke a downtrend today, then crypto becomes a positive again.

One Risk

The one key risk here is that the company did say on the last earnings call they are modeling crypto flat this quarter.

“Jen-Hsun Huang: We model crypto approximately flat.”

With the crypto price drop, it will likely be down from Q4 not “flat.” That’s all the hoopla for crypto-NVIDIA shorts.